Transcript of 612. Is Macy’s Thanksgiving Parade Its Most Valuable Asset?

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Hey there, it's Stephen Dubner with a quick word before today's episode. We have a new listener survey that I would love you to take if you have the time and the interest. We are always trying to get better around here, and feedback helps. So please go to freeeconomics. Com/survey. It'll only take a few minutes. Thanks for that. And as always, thanks for listening. I really only started paying attention to the Macy's Thanksgiving Day parade about 10 years ago when my family and I moved into the neighborhood where the parade starts and where the night before, they stage everything. This is on the Upper West side of Manhattan. They take over two extra wide streets to lay out the giant balloons. Each balloon arrives folded up flat in its own small rolling cart. It gets unpacked, folded, laid out on the pavement, and then comes the helium. There's a truck nearby with big helium canisters stacked horizontally on a rack. Up close, the balloons are really big. You see this as soon as they start drinking up some helium and puff up to full size. But tonight is Wednesday, the night before the parade, Inflation Night, they call it.

So the balloons aren't allowed to rise to parade height. Each one has a net thrown across top, and the net is held down by sandbags. If you happen to be passing by on foot, this can provide an unusual view of your favorite balloon character, a bulging eyeball, a massive derriere, some very chubby fingers. Many thousands of people come see the balloons on Inflation Night. It is an unusual and joyful scene for the visitors and the locals. For many people, myself included, it is the best New York night of the year. A lot of people who live on these blocks throw inflation parties up in their apartments. When you look straight down out of your window, you get another unusual and wonderful view of the balloons. I've watched this whole operation for several years now, and every year, I'm a little bit more impressed. The parade people execute the mission with a blend of military efficiency and childlike glee. You can't help but marvel at how much planning go into it. Also, how good the execution has to be, not just from the parade side of things, but from the city side and the broadcasting side.

It's not like they have weeks or even days to set up. On Wednesday morning, the streets are normal, full of cars, trucks, J-Walkers, dogs, bikes. Then the balloon people come and you get to see the real up-close version of the thing that everybody else has to watch on TV in miniature. The cleanup begins as soon as the last balloon enters the parade on Central Park West. And by the time they reach the Macy's flagship store down in Harold Square, our streets are back to cars and trucks again, although not so many since it's still Thanksgiving morning. Like I said, it's only recently that I began paying attention to the parade. I do remember it being on TV when I was a kid, but I don't know, I guess I just wasn't a parade person. Seeing it up close made me curious. And after last year's parade, I took a look at the TV ratings. Holy... Nearly 30 million viewers. Another 3 million plus watch in person from the sidewalk and grandstands. But the TV numbers blew me away. As you may know, the television juggernaut these days is the National Football League. Of the 100 most watched broadcasts last year, 93 were NFL games.

The Macy's parade was one of the remaining seven beaten out only by the State of the Union address. A TV audience of 30 million must generate a lot of ad revenue. Then I got to wondering, how much? Then I got to wondering, how much it costs to produce the parade? Simple questions, right? As it turns out, not so simple. Macy's is one of the oldest department stores in the US, and it has a lot of traditions. One of those traditions is not talking about the economics of its Thanksgiving parade. They like to call it their annual gift to the nation. We all know it's not polite to ask how much a gift costs. But today on for economics radio, we ask anyway.

Why do I need to know how much lying can cost to produce?

I can't tell you that. We can't talk about sensitive commercial topics out here.

Oh, I can't say how much they pay. Could try.

This is the first of a two-part series. We will look into the cost of the raw materials.

We do have our finger on the pulse of helium.

We'll look at how New York City pitches in.

I don't know how you guys found me, by the way, because most people don't know I exist.

We will hear from the CEO of Macy's who's trying to keep an old store alive when so much retail is dying.

I want to be perceived as giving this gift to the city and to the nation. I also to do a lot of business.

We ask an industry expert what Macy's stands for today.

Macy's doesn't stand for anything today.

Come along as we drink the helium and wonder if the Macy's parade may be the most valuable asset Macy's has.

This is Freakonomics Radio, the podcast podcast that explores the hidden side of everything with your host, Stephen Dubner.

We are hardly the first people to wonder how much it costs to stage the Macy's Thanksgiving Day parade. There are published estimates ranging from around $10 to $15 million, but they're just estimates, and it's unclear where those numbers come from, which It makes sense. Macy's doesn't like to talk about it, and therefore, it's hard to even identify all the costs. It's also hard to quantify the benefits. Keep in mind that most of the balloons and floats in the parade are sponsored by big brands that are presumably paying big money for the millions of eyeballs that will see them. The parade itself is one big ad for Macy's. But let's start by focusing on the costs. There is, of course, the expense of building and maintaining the balloons and floats. There is the casting and wrangling of the marching bands and other performers. There are all sorts of city services, police and sanitation and counterterrorism that somebody's paying for. Then there are all the personnel costs for the Macy's Parade Unit, which is a year-round operation. We figured we might as well start at the source.

Will Koss, and I'm the executive producer of Macy's Thanksgiving Day Parade.

What does Will Koss us actually do?

The executive producer oversees the entire production of the parade from our balloon and float design, construction, fabrication, and delivery to New York City on parade day to all of the logistics as it relates to shutting down three and a half miles of New York City on the busiest travel day in New York.

Koss grew up in New York, in the Bronx, and he went to college nearby on Long Island.

I traveled really far.

Have you ever lived outside of the New York City area then?

I've not.

Koss now lives on the Upper West Side with his wife and daughter. He's 44 years old. He started out as a producer for MTV, Nickelodeon, YouTube, and he got the Macy's job in 2021. But he sounds like a lifer.

We are part of the tradition of Thanksgiving morning for millions of people. If you love marching bands, we've got that. If you love giant balloons, we've got that. We've got floats, we've got celebrity. We've been a staple. Whether you're in front of the television or have it on the background, just using us as the soundtrack to your Thanksgiving morning, we're there.

Macy's itself was founded in 1858 by Roland Hussy Macy, a former whaler from Nantucket. He ran dry goods stores in Massachusetts and California before settling in New York City. They sold everything from clothing and furniture to groceries and books. By 1902, according to one history of the store, the human wants were few indeed that the Macy's store could not meet. By 1924, the Macy's flagship store in Harold Square was the world's largest store with over one and a half million square feet. That year, Macy's sponsored its first parade, a six-mile march through Manhattan. It featured three horse-drawn floats, four professional bands, and camels, elephants, and bears, borrowed from the Central Park Zoo. In these early days, Macy's released big helium balloons into the sky after the parade and offered a $100 reward for their return. That tradition ended in 1932, when a novice pilot, going for the reward, crashed into a balloon in the sky. It has now been 100 years since the first parade, although this year's edition is only the 98th since they took three years off during World War II. The parade today looks a lot different than it used to. When there are 30 million people watching on TV, appearances matter.

We are the largest televised variety show of the year. There's something about the work that we do that connects multi-generational. It's a responsibility that we don't take lightly, knowing that we have that impact on so many folks.

The demographics are far and wide and are representative of everyone that's in New York City and America.

Matt is Jenn Neil.

I oversee the strategy, the creative development, and the operations for all of our live events and specials across NBC.

Nbc Universal is the network that has carried the Macy's parade for 71 years. Neil's team produces roughly three dozen big live events a year.

Christmas at Rockefeller Center, New Year's Eve, the People's Choice Awards, Red Carpets around Hollywood's biggest nights like the Grammys, the Oscars. My role focuses on the entertainment side, but we We have incredible teams on the sports side that do the Super Bowl and the Olympics.

Can you compare the production and coverage of the parade to the Super Bowl? I mean, obviously, with the Super Bowl, there are many, many, many elements and features and so on. But it is, in the end, a self-contained athletic competition on one big patch of turf, whereas the parade is this roving multi-mile extravaganza through New York City.

There's incredible complexity in terms of the production. Each year, there are a number of elements that stay the same. Each year, we are evaluating what we want to evolve and change. Do the Broadway shows kick off the show? Is it better to have them in the second or third hour? A Super Bowl is incredible, and there's many dynamics that go into that, but you're still covering a football game which has the same rules and the same field of play each What is the timeline from your end?

When do you start working on a given year's parade?

We start looking at it right after the parade ends, truly, the week or two after. In fact, this year is the 98th year of the parade, and we are already talking about the 99th and the 100th anniversary.

The parade is an 18-month parade production to execution process.

That's Will Causs again.

My full Macy's studios team is over 65, full-time folks that range from our partnership team to our creative team to our studio production team, logistics, project management, production management. The 65 number is our full-time. As we get closer, we expand considerably.

The week before, they paint the star on 34th Street. The Monday and Tuesday nights, we shut down 34th Street in front of Macy's. We're rehearsing with all the performers. Wednesday night, we've introduced in the last two years a countdown show to bring to life the inflation of the balloons that happened magically on the Upper West Side. Then Thursday, we have a call time, the day of Thanksgiving, 2:00 AM.

Jen, where do you spend parade day?

I'm in the truck. I'm in the truck on parade day.

Which is where?

On 34th Street, or adjacent to 34th Street.

What's that day like for you?

There's a lot of energy, a lot of adrenaline. We go live at 8:30 through noon, so it's three and a half hours of that coverage. We have preparation and contingencies and plans for every single thing that can happen along the way. Then I do, once every parade, take 30 seconds during a commercial break and jump out into the streets and see the scale of Snoopy or the Minion or the Doughboy adjacent to the buildings in New York, and it's magic.

It also sounds incredibly expensive to produce from your side, not just the coverage part, but the coordination and the run of and talent and so on. Can you just talk about how extensive that is?

We don't really get into the cost of everything, but what I can say is we know that this is incredibly valuable to our advertising partners, and we know that advertising messages that are in the parade deliver stronger memorability and likability.

I did see on the NBC Universal site a report about the power of the parade from a consumer perspective, said that the year-over-year growth demonstrates that NBC Universal is moving consumers down the purchase funnel. What does that mean moving consumers down the purchase funnel?

First, our job is we got to make sure that this is incredibly entertaining and relevant and great TV. And second, brands want to be associated with this because their messaging is woven in, and each brand takes a different strategy to do that.

Can you give me an example?

When you are a Genio turkey and you want to have a turkey float, they're going to want to talk about the number of years of the big turkey spectacular and what Genio brings to you.

Well, the star of the Thanksgiving meal has arrived on a green and gold platter.

The signature colors of its gracious host, Jenny O. If you're the Jolly Green giant, you're going to talk about Holly traditions and some of those products. Well, there in the valley on the farm, the Green giant oversees the fall harvest, ensuring that Each vegetable for your Thanksgiving table is picked at the peak of perfection.

In other words, yes, the Macy's Thanksgiving Day parade is a parade, but unlike a Memorial parade or a victory parade or a pride parade, this one is plainly a commercial venture, a marketing venture.

If you have a Minions float, you're definitely going to talk about Stuart the Minions and the Frantic Bananas. Ronald McDonald, Smoky the Bear, all of these are traditions and floats that have their own unique messaging from forest fires to fundraising for children's hospitals to the Wondership float.

If I were to spec this out from a Super Bowl, I know the Super Bowl generates around $600 million in ad revenue that's had an ad rate of about $7 million per 30 seconds, and that's viewership of $110 million, so significantly more than the parade. But I could imagine that the total ad revenue for the Macy's parade might be in the neighborhood of $100 or $150 million. Does that seem ballpark or do you not know?

I I'm focused on the creative side and how are we covering this event in the best way to bring audiences at home, this extraordinary tradition.

We did later find an estimate from Vivix, a company that tracks commercial ad spending, they report that brands spent $76 million to advertise on NBC during last year's parade broadcast. Macy's would, as the saying goes, neither confirm nor deny, and that TV revenue presumably wouldn't include money the brands pay Macy's directly for the rights to sponsor a balloon or a float. Although we should say not every balloon or float is bringing in sponsor money because some of them are promoting Macy's itself. Here's Will Koss again.

Tom Turkey and Santa are Macy's owned and are the iconic elements that open and close the parade.

Okay, so there's no royalties being paid to the Santa Claus Foundation or anything like that, I assume? No. I want to ask you about the relationships with the brands and whatever you're willing or able to tell me about the financial relationship. My wife's favorite balloon when she was a kid, she grew up in New York, was the Pillsbury Doughboy. The first year we lived on this block, when we woke up the next morning at 6:00 AM and we looked down, it was just this magical site with the sunrise off the balloons, and there was the Doughboy. We could see the patches. His butt was taped a little bit, and it was just so beautiful and endearing. I thought, Wait a minute. Is that still the Pillsbury dope? Does Pillsbury still even exist? Then I started to think about Snoopy, and I thought about Snoopy I knew was the emblem of MetLife for a while and I thought, Oh, does that mean it's a MetLife balloon? Let me just make it an open thread for you to tell me what you can about why the balloons that are in the parade are in the parade and how that relationship works.

Pillsbury Doughboy We have our Snoopy, our peanuts characters, Spongebob Square Pants. The goal with all of our balloons is to create a moment that's instantly recognizable in the sky. As it relates to selection of balloon, the most important goal is to ensure that each of the characters resonates with our audiences, and our audiences, one to 100. We have some of those, we'll call them legacy characters. Then we have new characters that are appealing to a It's a younger audience.

Will, what if someone like me came to you and I said, Hey, Will, I've got this brand, Fre economics, Freconomics Radio. In some ways, it's a pretty big brand, but it's a big niche brand. It's not Teenage Mutant Ninja Turtles. It's not Spider-Man. I recognize that. But I've also got a pretty beautiful visual image, what we call an orple. It's an apple that you cut open and it's an orange in the middle. It's fruit. Who doesn't like fruit? I think it would be worth my while to try to figure out how to get my brand in front of the world. These 30 million people that are watching on TV, these 3 million that are there. Would you even take a meeting with me?

We're taking the meeting right now. You're underselling the brand, my friend. We're open to taking every meeting and every conversation. This is not an exclusive members-only type of event.

Well, maybe not quite members-only, but it is a small club. This year, there are 17 giant balloons in the parade. Sadly, the Freakonomics Orpel is not one of them, but this guy has one.

I pinch myself when I see the balloon fly down the main avenue there.

That is Jeff Kinney.

I'm I'm an owner of an unlikely story bookstore in Planeville, Massachusetts, and I am the author of The Diary of a Wimpy Kids series.

Now, for those who are children or have children who have read those books, you are somewhere between, I don't Jesus Christ, and pick your favorite cult hero ever. What's it been like to be you these last 15, 18 years?

The ride for me has been a lot like the Truman show. I feel like I created this character who's a stick figure, and somehow that has propelled me into the most unusual situations you could ever imagine.

How many books have there been now and how many copies sold globally?

There are 19 books in the main series. I have four or five spinoff books, and there have been about 295 million sold.

For people who don't know the series or don't know the character, just talk to me for a minute about Greg Hefley. Who is he? What is his interior and exterior life like?

Greg Hefley is a complicated character. He's a bit of a mess. He doesn't always do the right thing. At the time that I was writing Wimpy Kid, I was reading Harry Potter, which is about a boy who's an aspiration character. He's heroic. Greg isn't heroic. He doesn't really want to hear about his best friend Raleigh's vacation and their awesome adventures. He's like a Larry David type in a way. He's very flawed, but hopefully still lovable.

Give me a little bit of the origin story of Wimpy Kid itself and Greg Hefley himself and how you brought them to life, how long it took, et cetera.

My big dream was to become a newspaper cartoonist. When I was growing up, we got the Washington Post every morning. My father opened the paper to the comics page. So when I got up, it was already open to the Far Side and Bloom County and Calvin and Hobbes.

You had good taste in comics.

Yes. And I was like, Well, I know where I want to be. I want to be at the top of that page. And so in college, I created a comic strip that got the attention of the Washington Post. They did a big full-page article on the style section and said, Hey, this is the next big thing, this comic by this guy. And I believed it. Then I hit the reality of shrinking newspapers and the limits of my own talent, and I couldn't break into the comics. After about three years of bonking my head into the wall, I realized that it wasn't going to happen for me. At the time, I was keeping a journal. The journal was an organic mix of text and cartoon illustrations that showed what was happening in my life at the time. I looked at I said, Hey, maybe I've got something here. I can't be in newspapers, but maybe I can be in books. I thought, I'll fictionalize this. First, I'll write down every funny thing that happened to me in my life as a kid. I thought I could do that in about two months. Instead, it took four years.

It was a 77-page sketch journal, but I filled it with enough ideas for five books.

Then, as I understand, but correct me if I'm wrong, you're working as a game developer for Pearson Education, and you begin to publish some of this work online on a Pearson site called funbrain. Com. Is that right?

That's right. My boss was looking for something to keep traffic up over the summer months. I said, Hey, I'm working on this thing. It's not really for kids. It's more like the wonder years where an adult is looking back on their childhood, but it could work. I started publishing online. After about a year, we had 12 million readers. Holy cow. I got a lot of encouragement from adult readers who were following my almost blog-like entries.

Okay, and then that leads to a book contract. Just walk me quickly through the mechanics. What came first? Was there an agent? Was there a reach out from a publisher or editor?

I went to New York Comicon. I walked around with a sample packet. I heard about a guy who published a web comic called Mom's Cancer. I talked to the editor at a booth. He said, This is exactly what we're looking for, and I was off to the races.

You wind up publishing with Harry and Abrams, correct?

Yes. At the time, Harry and Abrams would be known as an art book publisher. Those gorgeous picture books that you have on your coffee table, primarily, they weren't doing a lot of this thing. What I really liked was that they treated books as an object to be valued. They put a lot of craftsmanship into their publishing. I thought, if I sign with Harry and Abrams, that might elevate the work itself. That's the way it's been with Wimpy Kid. About two weeks after the book was published, it got on the New York Times bestseller list, which was just an absolute shock. I remember my wife and I were jumping up and down on our kid's bed like we just couldn't believe it. Now it's been on the list, a combined total of something like 900 weeks.

Let's now talk about how you came to intersect with the Macy's parade.

In about 2010, Diary of a Wimpy Kid was doing pretty well. We had an ambitious publicist named Jason Wells who said, Hey, I think we could get a balloon in the Macy's parade. He approached Macy's and said, Hey, how about a balloon? They said, It might not be ready for a balloon, but how about a float? The idea I remember was that there was going to be a standing Greg Hefley, and at the base of the float would be a bunch of kids reading. It would be a float to promote reading and literacy.

That sounds a little, what's the word I'm looking for? More reverent, perhaps, than the Wimpy Kid brand is.

That's right. We said, We're going to hold out a little bit and see if we get into balloon territory.

Then what happens next?

The next year, I think I got named to Time magazine's Most Influential People list.

Congratulations. Thank you very much. That theoretically makes you Balloon, were they? Yeah, right.

Macy's said, Yes, please. We'd like to do a giant helium balloon. My publisher was kind enough to sign on for the terms.

Tell me what you know about that negotiation and the terms of the deal?

As you can probably imagine, the terms are proprietary, so I can't talk about that, but it was a multi-year situation. You pay a certain amount to get the balloon made and then a certain amount to have it flown every year. That first balloon flew for three years, and then we reupped and flew it for another three. That's really the pattern we've been in for now a good long time. I have no idea what Macy's deals look like with other creators if we're standard, if we have our own separate thing.

Has Harry and Abrams continued to basically pay for or subsidize the participation?

To their great credit, Abrams has continued to support the balloon. This past balloon, I chipped in because, of course, I have a big stake in this as well.

Any idea what it costs to make it?

I don't know what the actual costs are to make a balloon, but I would guess it's somewhere around the low $100,000 range.

I guess the big question is, how do you and your publisher think about ROI and all that that implies? Not just whether it extends and grows the brand and sells more books and so on, but if it creates a different awareness around the brand?

That's a really good question. We think about it a lot. It's possible that the balloon is one of the legs of a chair. If you kicked out that leg, maybe the whole thing collapses. The fact that Wimpy Kid is still going strong suggests that the balloon is a part of that equation. But there's also some real pride that's associated with the balloon. Everybody gets to hold the string and walk down the streets of New York City.

What's that like?

It's nerve-wracking in a way because you're presenting yourself to the world. You're saying, Hey, my property is worthy of being here. I remember the first few years, we would walk the balloon down the main avenue and I think people were scratching their heads. What's this? Is this Charlie Brown? Who is this? Over time, one of the rewards of this has been that Wimpy Kid has seeped into the cultural consciousness. So Now, most people know what the cheese touch is.

Explain the cheese touch for those who aren't familiar.

There's a piece of cheese in the first book that sits under a basketball hoop, and it becomes an existential threat to Greg and to all of the middle schoolers. Everybody's worried about getting the cheese touch because it means certain death in the middle school popularity ranking.

This year will be Wimpy Kids' 14th consecutive Macy's parade. That puts him on the all-time leaderboard, but he's still way behind Snoopy with 43 appearances and Pikachu with 24. Kinne told me that a balloon typically lasts 3-5 years. He is now on the third version.

I think we've gotten better and better at it, and now Greg really looks exactly like I'd like him to look.

Describe the current balloon.

The current balloon has Greg hunched over getting ready to touch the piece of cheese Macy's. I said to Macy's, We really need to do something special. What can we do? And they came up with an idea that the cheese itself could be in a cart or a car. That's like a motorized vehicle that could spin and spew green smoke into the air to make the cheese look like it's emitting smells.

Let's go back for a sec. Describe the design process and how involved you are.

It's really exciting. It starts with a sketch, and then it moves to a pen and ink drawing. Then Macy's has to turn that into a 3D model, which is not so easy with my character. My characters are two-dimensional purposefully. I don't have any sense of 3D space at all. The first time we saw a Wimpy Kid balloon was the first time we saw Greg Hefley articulated in three dimensions.

He has a butt.

In the early days with Macy's, I'd go down to Hoboken, New Jersey, and there would be a clay model waiting for me. The clay was still pliable. Then we would make changes on the fly with a really skilled artist. It would spin around on a pole so we could see it from every angle and really imagine what it would look like from the street level.

Since Jeff Kinney's first Wimpy Kid balloon, the Macy's Parade Studio has moved from Hoboken to nearby Monakey, New Jersey. Rather than clay, balloon modeling now is done with 3D printers. Coming up after the break, let's go to Monakey.

Welcome to Macy's studios.

I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.

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Will Koss, the parade's executive producer, met us at the Macy's Parade Studios in Monakey, New Jersey, just a few miles across the Hudson River from Manhattan.

This is our 3D printing room. So this is Diary of a Wimpy Kid.

We're looking at a three-foot plastic model of Greg Hefley.

We've got our character here actually laying on the table at the moment. But if he was sitting in flight position, he'd be pointing at the Stinky Cheese, which will be preceding him down the line of March.

We are inside a sprawling brick and glass building that from the outside looks like an office building, but inside it's a 72,000-square-foot warehouse with 44-foot ceilings and a variety of workshop stations. It's also a little bit noisy.

The floor that we're standing on right now is our fabrication floor.

As we walk through, Koss points out some floats under construction, including a float representing the Bronx Zoo.

We'll have girafes, we'll have tigers, we'll have gorillas, birds.

These girafes and tigers are not real the way they would have been back in the beginning.

Every element that you see here being sculpted by our very, very talented artist start as a block of foam. We're going to walk over to meet the legend himself, Mr. John Cheney.

How are you?

Good to see you. I brought some friends to talk to John Cheney is a carpenter who has worked on nearly 50 Macy's parades.

I came to New York and I wanted to be an artist. I went to the Art Students' League, and in a few months, I started running out of money. But my dad used to always have the parade on, and I met some girl who wanted to work in the costume shop. So I said, I'll just walk over to Macy's and see what's happening. Fifteen years ago, it was a lot different than all the paperwork now. They had this hiring rail. You got up to the rail and there were all these kids around with very nice suits and everything. I got ripped up jeans and a T-shirt on. I said, I want to work the parade. I said, Hey, he wants to work the parade. That's how I got hired. How does it feel for Cheney to work year round on something that'll be seen for just one day? Well, millions of people see it, so the exposure is really great. But there is something mind boggling about doing all this work for one night and setting it all up in one day and now taking it down. I guess that's part of the pressure. You have this incredible deadline, and we work all night in the beautiful weather because we don't even dare say that other word.

The week before is maybe the hardest time. It's like getting into the water. Once you're in there, damn it, we're doing it. I don't care what's going wrong. Let's go. Cheney is one of a couple dozen members of a team of carpenters, sculptors, welders, electricians, costume designers, and what are called balloon technicians. Here's Will Koss again.

Right now, we're on the Balloon Studio floor. Once our balloons are flattened, they make their way over to our heat sealing tables. This is essentially a sewing machine, but instead of a needle and string, it's actually melting the two pieces together. We actually have a balloon in process right now. This is Marshall, our PAW Patrol pup.

Marshall is a firehouse Dalmation from the animated kids show, PAW Patrol.

Marshall is presently rigged to one of our rigging points in the ceiling.

At this point, he just looks like a big white round blob with no distinguishable limbs. That's because how these giant balloons are built.

The head right now is the chamber that's inflated. The rest of the balloon is deflated because we're working specifically on the head unit. That's how all of our balloons are fabricated. They're fabricated into chambers, which gives us some flexibility if we do run into a situation on parade day to quickly try to remedy that one specific area without it compromising the integrity of the entire balloon.

Jeff Kinne had told us earlier about a mishap with the Wimpy Kid balloon.

Yeah, I think Greg's hand popped this last year, and it looked a little bit sad, but these things happened.

Marshall, the Dalmation, is a new balloon in this year's parade, one of six. All the new balloons will need to have a dry run outdoors before the parade.

Our volunteers, our balloon handlers, and our flight management team have an opportunity to see the balloons working in real-time and reacting in wind conditions and take notes prepare for Thanksgiving Day.

This dry run is called Balloon Fest. It happens in the parking lot of MetLife Stadium in East Rutherford, New Jersey, about four miles from the Macy's studio in Monakey. Balloon Fest is always held on the first Saturday of November.

Good morning, everyone. Welcome to Balloon Fest.

There are several hundred volunteers to handle the balloons. On parade day, there will be 5,000 parade volunteers. Okay. I need 20 handlers. The six new balloons, including Marshall and Mini Mouse and a new Spider-Man, they are already inflated and held down under a net with sandbags. When the time comes, the sandbags are taken away, the nets are pulled off, and the volunteers slowly unroll the thin ropes that are attached to what they call the handling bones, which are plastic X-shaped grips. One, two, three, four, five, six, seven. Once the balloons are up in the air, the volunteers walk them around the parking lot. Will Koss is paying close attention. Everything looks good. Nearby is the Helium truck. Here Here's the Helium guy. The trailer is about 40 feet long. There are 12 high pressure steel tubes in there. If you could get all the Helium out of each one of those tubes, you could fill about 6 to 8 of these balloons with a single trailer. His name is Kevin Lynch. I'm the vice President of Global Helium for Messer. Messer is one of the big players in the Helium market. It and the companies it has acquired have been providing Helium to the Macy's parade for decades.

The Helium that's here today started in an underground helium reservoir in Amarillo, Texas. Here we are filling balloons. But if you put too much helium in it, that whole crew of people would be rising up into the sky. Lynch tells us that each giant balloon takes around 15,000 cubic feet of helium. So how much does that cost Macy's? I can't tell you that. We can't talk about sensitive commercial topics out here. The price of helium itself is not a particularly sensitive topic. Helium is used widely in medical settings and elsewhere, and there's a strong global market for it. Believe it or not, giant balloons consume only a tiny share of the helium market. We did a rough calculation of what it would cost to fill the 17 balloons in this year's parade if you paid market price. It was around $425,000. I asked Will Koss if this sounded about right, but he wouldn't take the I also asked him what Macy's does about the occasional helium shortage.

We do have our finger on the pulse of helium. It's a market that adjusts over time, but we plan for it, and we have good relationships with our vendors across our helium supply teams.

What's your biggest concern or anxiety or the thing on your to-do list that keeps you up the night before? I guess I would assume the weather, but maybe I'm wrong.

The weather is definitely a concern for us. We are a rain or shine event. Unless there's significant weather that would impact the flight of the balloons- Wind, particularly.

Yeah.

Yeah. Wind is one of the most potential risks on our overall parade. We've had some snow in our history. I don't wish that on us. I've been fortunate enough to have relatively good weather. I know my time is coming at some point.

It's probably good for the broadcast, though, isn't it, snow?

It would look beautiful, but we do still have to get 5,000 people in 27 floats and 17 large balloons down the parade route. I'd love it to snow a 12:01. How about that? Or 11:59.

So far, we've heard from the key people who create and broadcast the Macy's parade. But there is one more partner, a silent partner, without whom it could not happen.

If there were no permits, it would be a free for all.

I'm Stephen Dubner. This is Freeconomics Radio. We'll be right back.

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My name is Dawn Tolson, and I'm the executive director of Citywide Event Coordination and Management and the street activity permit office, and those are a lot of words.

Tolson has worked in New York City government for a decade. Her office issues permits for many types of events, street fairs and farmers markets, festivals, and of course, the Macy's parade. We told her we were trying to put together the costs of the parade, and she did give us a little bit of pricing information.

An application fee is non-refundable, and that's $25. Then it ranges from zero, no cost whatsoever, up to something that could be 66K per block, depending on the use of space and the impact.

The Macy's parade uses 40 plus blocks, and it is undeniably high impact. Does that mean that Macy's pays the city something $3 million, 40 some blocks times 66K per block?

Oh, I can't say how much they pay. Could try. Macy's is a partner with the city. They put on two very iconic events in New York City that are birthdays and holiday events for America.

The other one she's talking about is the Macy's fourth of July Fireworks, which, no offense to fireworks, is nowhere near as big a deal as the parade.

And so We know the importance of that, and we work with them. But I can say that they do work really hard with us to make sure that we are very cognizant of the amount of resources that we're using, that we're not over-extending, that we're also being fair to the employees and the workers.

When Tolson talks about the resources the city is using, these are serious resources, including law enforcement and emergency crews. Here is Will Koss, again, from Macy's.

The security plan is a quite detailed plan.

You could imagine if you were throwing a parade for three and a half million people on the sidewalks and 30 million people watching a live broadcast, that you would invest a lot in security planning and execution.

There's a variety of personnel that are visible on the parade route and other layers of security that are less visible.

Hats off to the NYPD. There are people out there that were there since 1 AM in the morning putting barricades in place and moving vehicles around, so you don't even hear a car honking. Then you've got counterterrorism, working with the FBI on any threats. You've got TARU, their Technical Assistance Unit, who are doing the counterdrone stuff with the FBI. Then you've got the DC their press group, doing press conferences with their chief of departments and chief of patrols. Basically, you're enacting the entire NYPD.

What does it cost to enact the entire NYPD? How much of that comes from Macy's? The parade, for all its goodwill and vibes, is a commercial event. You could imagine Macy's contributing heavily to the city services. On the other hand, even if you don't buy my argument that New York City is the real star of the show, the city does get a lot out of the parade. When I was a kid and saw the parade on TV, I barely noticed the floats and balloons. I was staring at Central Park West to a farm boy, which is what I was. The balloons and floats were cute, but the fantasy was New York. So does New York City kick in all those resources for free for the Macy's parade? Does the cost of the permit itself cover all these services? Those are questions that no one would directly answer on either the city side or the Macy's side. There are other city resources to talk about, other city agencies that get involved.

We have four walk throughs with all of those agencies, as in we're walking the route four times. In New York City, the city of scaffolding, there's a lot of obstructions along the path. We have to walk that path to see what construction is going on, what potholes are in the street, what is up above.

Street lamps, for instance. In 1997, the parade was held on a very windy day. At Central Park West in 72nd Street, the six-story tall cat in the hat balloon hit a lamp post and knocked off part of it. Several people were injured, including one woman who was in a coma for 24 days. Macy's and the city now work together to prevent that thing. Will Koss again.

All of our balloons and floats starting up at 77th Street and all the way through 34th Street, that entire parade route has to be cleared of any aerial obstruction.

This clearing process includes what Koss calls light swings.

We have a team to to physically move all of the light poles out of the way. They're loosening them, and then we're actually swinging all of the poles. It's done under the dark of night.

Dawn Tolson again.

Sanitation. We haven't even talked about sanitation. I didn't know this until a couple of years ago that there's a special unit that deals with the horse refuse.

This horse refuse comes from the NYPD and Parks Department mounted units that march in the parade.

We forgot to call them one It was not pretty.

One of our responsibilities is to clean up the horse poop. That is Jessica Tisch. When we spoke with her, she was New York's Sanitation Commissioner. We have one to two sanitation workers for every four to five horses. Tisch has just been named Commissioner of the NYPD. As Sanitation Commissioner, her job was to make the parade route as photogenic as possible on Thanksgiving from 8:30 AM Eastern Time until noon.

Those streets, about 42 blocks, they need to sparkle because New Yorkers and people from around the world all converge on that part of the city, and we want those streets to look really good. After the parade is obviously a huge effort. We have about 150 sanitation workers who are involved in the post-parade cleanup. They are doing manual cleaning with brooms and baskets, but also our mechanical brooms, which can sweep 1,500 pounds of litter, are out in full force. About 71,000 pounds of trash is collected by the Department of Sanitation as part of the cleanup of the Thanksgiving Day parade.

Once again, we couldn't learn anything significant about how these costs are allocated or perhaps shared. New York City plainly derives value from the parade. There's the marketing value of the broadcast, but also three and a half million in-person spectators generate a lot of economic activity. How much? Those numbers, too, are, shock of shocks, hard to come by. If we began this episode hoping to run even a rough cost-benefit analysis of the Macy's Thanksgiving Day parade, we have failed. Too many the costs are privately held. We can guesstimate the overall TV ad revenues, but we don't know how that money is split between Macy's and NBC and whatever agencies or other middlemen are involved. We took one more shot. We asked to speak to the man at the top.

Tony Spring, chairman and CEO of Macy's Inc.

Macy's refers to the parade as, A privately sponsored and privately funded event and is regarded by Macy's as its annual gift to the nation. I understand that as with most gifts, you don't tell people how much the gift costs when you're giving it to them. But why is it so important that no one knows how much the parade costs? Because we've been trying to figure it out and really failing.

Why? Do I need to know how much lying can cost to produce?

But I can figure that out.

Okay, go to the Hayden Planetarium and what did it cost?

I can figure that one out, too, Tony. I can't figure out the parade.

I guarantee you you're bright enough, much brighter than me. You can figure this out. But I would like to focus more on the fact that a hundred years later, 98 parades later, this thing is still relevant and is a great example of if we were still marching animals up and down the street, it wouldn't be as relevant today. But the fact that it evolved over time and includes a level of modernity, includes a level of history, floats that have been there over the years, floats that are new this year, balloons that are new this year, that is just like the fireworks. I think what makes it such an amazing spectacular.

Okay, so the Macy's parade is still relevant. Here's a bigger question, especially for Tony Spring. Is Macy's still relevant? Coming up next time in part two of our series, brick and mortar retail has been declining for years, and Macy's is planning to close 150 of their stores. Tony Spring took over less than a year ago, and he is pushing for a renaissance. At least he's optimistic.

Now is the time to buy Macy's.

Next time, we go deep with Tony Spring, and we get another view, too.

Macy's has a hell of a challenge over the next few years to remain upright, let alone become successful as they once were.

We also visit Wimpy Kid author Jeff Kinney up in Massachusetts, where he is trying to launch his own retail renaissance.

If you invest in your downtown, can you change the of a town? And I don't know the answer to that.

That's next time on the show. Until then, take care of yourself, and if you can, someone else, too. Also, if you'd like to learn more about Helium, be sure to follow another podcast we make, The Economics of Everyday Things. Host, Zachary Crockett went deep on Helium supply and demand in an episode that will be out very soon. Freeconomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also at freeconomics. Com, where we publish transcripts and show notes. This episode was produced by Elina Coleman. We also had recording help from Alexander Overington. Special thanks this week to Thomas Rucupero for the research paper and to Harland Cobin. Our staff also includes Augusta Chapman, Dalvin Abouhajee, Eleanor Osborne, Ellen Frankman, Elsa Hernández, Gabriel Roth, Greg Rippen, Jasmine Clinger, Jason Gambrel, Jeremy Johnston, John Schnarr, Lyric Baudich, Morgan Levy, Neil Caruth, Rebecca Lee Douglas, Sarah Lilley, Teo Jacobs, and Zack Lepinsky. Our theme song is Mr. Fortune by the Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening.

When I see a crowd, I'm thinking to myself, Wait a minute. Did I issue a permit for that?

The Fre economics Radio Network, the hidden side of everything.

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